Subramanian Swamy, opposition party president, has said the home minister could have stopped the scandal [AP]

An Indian judge has thrown out a petition to prosecute Palaniappan Chidambaram, the country's home minister, for signing off on part of a telecom scandal that may have cost the government as much as $36bn in lost revenue.

The plea "to summon Chidambaram as an accused is dismissed", Judge OP Saini told the courtroom in a brief statement on Saturday.

The ruling brought a rare moment of cheer to Prime Minister Manmohan Singh's government, which has seen its standing battered by the cut-price mobile licence sale.

"It is a relief," Pranab Mukherjee, India's finance minister, told reporters.

The ruling comes just before state elections scheduled on Wednesday, whose outcome could have an influence on the 2014 general elections.

Regional opposition party leader Subramanian Swamy, who brought the case against Chidambaram, had insisted the politician could have intervened to avert the tainted sale when he was finance minister in 2008.

The latest ruling can still be challenged in a higher court.

The telecoms ordeal is the largest of several scandals to have emerged during Singh's second term, denting India's image as an investment destination and heightening concerns over policy when Asia's third-largest economy is slowing.

The Supreme Court on Thursday ordered 122 telecoms licences issued under that 2008 sale be revoked.

Two ministers, including former telecoms minister Andimuthu Raja who presided over the 2008 grant process, have resigned.

Saturday's court ruling also removes one major political weapon from the opposition which has been unrelenting in its attacks on the government over corruption.